Dow, S&P 500 backed by defensives after massive selloff

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A Wall Street sign is pictured outside the New York Stock Exchange in New York on October 28, 2013. REUTERS / Carlo Allegri

  • The biggest Dow winner among the Wall Street indices; The Nasdaq underperforms
  • Boeing hopes China will lift 737 MAX ban
  • Indices: Dow up 0.30%, S&P up 0.16%, Nasdaq down 0.26%

September 29 (Reuters) – Gains in defensive stocks and Boeing helped the Dow and S&P 500 indexes regain lost ground on Wednesday after concerns over inflation and rising Treasury yields sparked one of the worst sellers of Wall Street this year.

Eight of S&P’s top 11 sectors advanced, with healthcare (.SPXHC), consumer staples (.SPLRCS), utilities (.SPLRCU) and real estate (.SPLRCR) increasing by 0.7% and 1.6%.

Investors remained loyal to relatively stable sectors as concerns over economic growth and a possible government shutdown rocked sentiment.

Federal Reserve Chairman Jerome Powell also warned Wednesday of medium-term economic uncertainty and that inflation is likely to remain high this year. Read more

A 3.3% jump in Boeing Co (BA.N) shares also pushed up the Dow blue chips (.DJI) and the benchmark S&P 500 (.SPX).

Boeing said its 737 MAX test flight for China’s aviation regulator last month was successful and the aircraft manufacturer is hoping the two-year ground standstill will be lifted this year. Read more

The Nasdaq lagged behind its peers as major tech stocks including Alphabet Inc (GOOGL.O) and Facebook (FB.O) remained under pressure from relatively high Treasury yields. Expectations of higher inflation should keep yields high this year.

“I think there was a very quick adjustment to what was a more hawkish Fed (last week) and the realization that inflation could be a bit more sticky than transient,” said Bob Shea, CEO of TrimTabs Asset Management in New York.

“We’re going to have short-term volatility around the dysfunction of our very divided government. Ultimately they’re usually forced to do the right thing, but watching this is usually an uncomfortable and volatile time for the market.”

The U.S. Congress has just two days before the federal government begins shutting down many of its operations, unless Democrats manage to pass a bill providing new funding for the fiscal year that begins Friday. Read more

JPMorgan Chase & Co (JPM.N) Managing Director Jamie Dimon also warned that a US credit default would be a “potentially catastrophic” event. Read more

The S&P 500 Index is now on the verge of breaking its seven-month winning streak as fears over the China Evergrande default, potentially higher corporate taxes and a faster-than-expected Fed decline have clouded investor sentiment in what is generally a low seasonal month.

At 12:27 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 102.30 points, or 0.30%, to 34,402.29, the S&P 500 (.SPX) was up 6.90 points, or 0.16%, to 4,359.53, and the Nasdaq Composite (.IXIC) lost 37.51 points, or 0.26%, to 14,509.17.

Among other players, Dollar Tree Inc (DLTR.O) jumped 15% after the discount retailer raised its share buyback plan to a total of $ 2.5 billion.

The advancing issues outnumbered the declines by a ratio of 1.42 to 1 on the NYSE. The worsening issues outnumbered the advances for a 1.13-to-1 ratio on the Nasdaq.

The S&P Index recorded three new 52-week highs and two new lows, while the Nasdaq recorded 21 new highs and 108 new lows.

Report by Devik Jain in Bangalore; Editing by Saumyadeb Chakrabarty and Maju Samuel

Our Standards: Thomson Reuters Trust Principles.


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